Question

Your real estate agent mentions that homes in your price range require a payment of $430...

Your real estate agent mentions that homes in your price range require a payment of $430 per month for 30 years at 10% annual percentage rate. What is the size of the mortgage with these terms?

a.)11,372.23

b.)4,053.57

c.)48,998.85

d.)58,798.62

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Homework Answers

Answer #1

In order to calculate the value of loan at the beginning of the mortgage, we will have to calculate the present value of all the future payments.

We will use the following formula for calculating the present value of this annuity :

Putting following values in to the formula :

C = $420

i = 10%

n = 30 years

Thus, the value comes would be

PV of annuity = $420 * 9.43

PV of annuity = $4,053.57

OPTION B

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